Monetary Integration and the Cost of Borrowing

Marta Gómez-Puig ()

No 134, Working Papers in Economics from Universitat de Barcelona. Espai de Recerca en Economia

Abstract: With the beginning of the European Monetary Union (EMU), euro-area sovereign securities adjusted spreads over Germany (corrected from the foreign exchange risk) experienced an increase that caused a lower than expected decline in borrowing costs. The objective of this paper is to study what explains that rising. In particular, if it took place a change in the price assigned by markets to domestic (credit risk and/or market liquidity) or to international risk factors. The empirical evidence supports the idea that a change in the market value of liquidity occurred with the EMU. International and default risk play a smaller role.

JEL-codes: E44 F36 G15 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2005
New Economics Papers: this item is included in nep-eec, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Related works:
Journal Article: Monetary integration and the cost of borrowing (2008)
Working Paper: MONETARY INTEGRATION AND THE COST OF BORROWING (2005)
Working Paper: Monetary integration and the cost of borrowing
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